FEATURED STORY

by Janet Haney

Alvin Roth can be described as any of the following:
karate enthusiast, high school dropout, and most
recently, Nobel Prize winner. An eclectic blend of
characteristics but all true of Roth, who in October
was awarded the prestigious Sveriges Riksbank
Prize in Economic Sciences in Memory of Alfred
Nobel, an honor he shares with Lloyd S. Shapley
of University of California, Los Angeles. The two
scholars were recognized for their contributions
to the theory of stable allocations and the practice
of market design.

A native New Yorker, Roth attended public high
school in Queens, and while a student, he was
enrolled in the Columbia Science Honors Program.

He never received his high school
diploma though and admits he was
“sort of an unhappy high school
student.” But this bump in the road
is all ancient history and did not deter
Roth from earning his bachelor’s degree
in operations research at Columbia
Engineering, and his master’s and PhD
in 1973 and 1974, respectively, from
Stanford University. “I had an abrupt
break with my high school,” says Roth.
“People at Columbia knew me and they
wrote me letters of recommendation.
So that was a college I could get into
without credentials, and I was very
happy to go there. Talk about life-changing
experiences. Columbia threw
me a lifeline.”

In typical Nobel Prize fashion, Roth,
the Craig and Susan McCaw Professor
of Economics at Stanford, got the news
via a 3:30 a.m. phone call. “By 4:30
a.m., a team of Stanford public relations
staff was in our dining room,” he
recalls with a laugh. “I had 1,500 email
messages that day and a lot of them
were from news organizations. I would
talk to someone for seven minutes and
then do it all over again.”

So needless to say, when asked what
it feels like to be a Nobel Prize winner,
Roth simply states, “Hectic but good.”

Roth, who is also the Gund Professor
Emeritus of Economics and Business
Administration at Harvard, remains
consistently humble and always
mentions “we” when referring to his
vast accomplishments, rarely using “I.”

While Roth and Shapley worked
independently, the combination of
Shapley’s basic theory—the Gale-Shapley algorithm—and as cited by
the Royal Swedish Academy, “Roth’s
empirical investigations, experiments,
and practical design has generated
a flourishing field of research and
improved the performance of many
markets.” The men were recognized
for their outstanding example of
economic engineering.

Roth’s market examinations have
led to the redesign of aligning kidney
donors to patients, matching medical
residents with hospitals, pairing
students with public schools in large
urban settings, and more.

“One way to tell my story is that I
started out as an operations researcher
who studied game theory. I stood
my ground while the disciplinary
boundaries in operations research
shifted around me,” he says. “I’m still
doing what I set out to do, but it turns
out that that makes me an economist
these days.”

To date, 82 Columbians—including
alumni, faculty, adjunct faculty,
researchers, and administrators—have
won a Nobel Prize at some point in
their careers. Within that number are
two Columbia Engineering graduates
who have won the Nobel Prize in
Economics: Robert C. Merton BS’66
in 1997 and now Roth in 2012, both
from programs housed in the Industrial
Engineering and Operations
Research Department.

Roth made his way back to Stanford
just last year after having taught at
Harvard for 14 years. At Harvard,
he created two new courses—Market
Design and Experimental Economics—that he plans to teach to Stanford
students.

“When I was a student at Columbia
… I eventually got interested in things
that involve a lot of people, and that
led me to market design,” Roth says.
“The same thing that was exciting as an
undergraduate is still exciting.”

Q Please explain the research that was recognized by
the Nobel Committee.

A There are two parts to that. One is the study
of matching, which they call the study of stable
allocations. The other is market design. My colleagues
and I study matching markets, which are markets
where price doesn’t do all the work the way it does
in commodity markets. So there are markets in which
people on both sides of the market care who they are
matched to. These are some of the most important
markets in our lives; they determine where you go to
school and college, what job you get, maybe even who
you marry. In matching markets, you can’t just choose
what you want; you also have to be chosen.

As
we start to understand how these
markets work a little bit better, we can
help fix them when they’re broken.
We’ve helped to design school choice
procedures for New York high schools,
Boston public schools, and, lately, a
number of other cities. We’ve helped
design labor market clearinghouses
for a variety of health care professions.
We’ve helped design kidney exchange
protocols. A lot of what we do is make
small changes that make existing market
places run smoother.

Whenever we successfully make
a market design solution that gets
implemented, there are always a lot of
people on the ground associated with
that. When we design a school choice
system, it means that in the city where
it succeeded there are some dedicated
educators who got excited about it and
carried it forward. When we design
a medical marketplace, it means that
some doctors got excited about it.
When we design a kidney exchange, it means that there are kidney surgeons
who are pushing it forward. We help
them. Market design is a team sport.

Q When did you know that Shapley’s
basic theory combined with your
research would help to improve
some markets?

A When I first started studying the
markets for new doctors, I found that
the way they had been organized in
the 1950s was closely related to the
work the late mathematician and
economist David Gale and Shapley
did in the 1960s. When I noticed that,
I started to understand how the work
of Lloyd and his colleagues would help
me understand how markets worked.
The specific work they did on market
clearing algorithms has been of big
practical importance in designing
clearinghouses, and it also serves as
a guide to many of the things that
even decentralized marketplaces have
to accomplish.

Q How do you come up with your
research ideas?

A There are times when we reach out
and there are times when we’re reached
out to. New York City called me.
The medical marketplace called me.
There are other markets where we’ve
approached them. We wrote about the
kidney exchange and sent papers to
surgeons, and one of them followed
up. That was Dr. Frank Delmonico of
Harvard Medical School, who was one
of my guests in Stockholm. We helped
him form the New England program
for kidney exchange once we had gotten
his interest. I’m still doing lots of work
on kidney exchange—that’s not done.
As things get established, people
develop new strategies; the marketplace
has to react a little bit. That’s an
ongoing process of design and redesign.
Markets have rules. That’s part of what
market design is, setting the rules of
the marketplace.

Q What are some of your favorite
Columbia memories?

A My main activity at Columbia
wasn’t academic. My most vivid
memories of Columbia involve being a
karate player. It wasn’t a varsity sport, it
was a club, but we had a team and we
played other clubs. I was involved in a
Japanese style of karate called Shotokan
karate. I was only at Columbia for three
years, so it was something I did all three
years. I also have fond memories of
many of my professors, including Cyrus
Derman, who convinced me to go to
graduate school.

Q After Stanford, you set off on
an academic career. Where have
you taught?

A I taught at the University of
Illinois (1974–1982), the University of
Pittsburgh (1982–1998), and Harvard
(1998–2012). Illinois was my first
job, and I started the work on kidney
matching there, and I met my wife
there. Pittsburgh was a great job, and
we built a big center of experimental
economics there. I did my first design
work there. I redesigned the medical
match while I was at Pittsburgh.
Our children were born there. Harvard
was great, and that helped make these
things into recognizable fields. Here at
Stanford, I’m going to be colleagues
of some of my Harvard students.
That’s a special thing.

Q Is anyone in the family following in
your footsteps?

A Our son Aaron graduated from
Columbia College with a joint major
in computer science and mathematics
in 2002. He’s now a professor of
computer science at the University of
Pennsylvania. Our son Ben is a first-year
PhD student in economics at MIT,
thinking about development economics.
My wife Emilie has the exciting job
in the family. She’s a human factors
engineer. She thinks about the man—the person—in the system. She and I are both concerned with complicated
systems that involve people, but she’s
concerned with them dealing with
machines. I’m concerned with them
dealing with markets.

Q Who was with you in Stockholm
for the Nobel Prize ceremony?

A We were allowed 14 guests.
Our guests were our children, some
relatives and friends, and a bunch
of colleagues on market design
projects—other economists, operations
researchers, practitioners, two kidney
surgeons, an education professional,
and a job market matchmaker.

Q How will you use your shared $1.2
million award money?

A I haven’t really thought about that.

Q Where does a Nobel Prize winner
go from here?

A It’s a great honor to be chosen,
and it’s a great honor to share
the prize with Lloyd. He was
a giant of game theory when
I was a graduate student.
Going forward, I’m hoping
to write a book on market
design addressed to a broad
audience. It’s going to be
called “Who Gets What?”
I’m also still deeply involved
in work on school choice and
kidney exchange, and other
aspects of transplantation,
and I’m looking forward to
seeing what new projects
materialize.